Fair Pricing for Milk Powder

2 Ms Tin Pei Ling asked the Minister for Trade and Industry (Industry) given that the rise of milk powder prices in Singapore far exceeds inflation rates and the increment in other countries, whether the Ministry will work with local distributors and retailers to ensure fair pricing.

The Senior Minister of State for Trade and Industry (Dr Koh Poh Koon) (for the Minister for Trade and Industry (Industry)): Madam, I share the Member's concern that local distributors and retailers should price milk powder appropriately. Another Member, Ms Sun Xueling, has also spoken about milk powder in her interviews with the Straits Times and Lianhe Zaobao over the weekend.

The Government is as concerned as Members are about the high price of infant formula. We have been monitoring the situation and taking steps to address the concerns. The Health Promotion Board (HPB) and international organisations, including the World Health Organization (WHO), strongly encourage breastfeeding as it can provide the nutritional needs of infants, with the added benefits of promoting mother-child bonding. Breast milk is the best milk to meet the nutritional needs of infants. HPB recommends that, where possible, mothers should exclusively breastfeed their babies for the first six months. Between six and 12 months, babies should be given breast milk along with complementary foods. For children above 12 months of age, cows' milk, as part of a balanced diet, is adequate to meet their nutritional needs. Formula milk is not required for children beyond the first year.

We recognise that, in some cases, infants cannot be exclusively breastfed and will need infant formula as a form of supplementation or the main form of their feeding. Hence, we have food regulations which stipulate quality and safety standards for infant formula milk sold in Singapore.

Singapore's standards are similar to international standards in terms of required essential vitamins and minerals. Let me assure all mothers and Members of the House that all infant formula sold in Singapore, regardless of price, meets Singapore's Food Regulations and the nutritional needs for infants to grow healthily.

Some infant formula companies give the impression that their particular brands of milk powder can do more. The scientific evidence for this is weak. Without better information, parents should be careful about relying on the claims made by infant formula companies or be misled into using price as a proxy for the quality of the product. The Government will take steps to address this problem, including referencing the best practices in other jurisdictions.

Public awareness is important to support parents in deciding what is best for their children. HPB, together with healthcare institutions and healthcare professionals, will get the message out, especially to mothers-to-be.

Besides consumer education, the Government will also do more through these few things. First, we will do more through our maternity hospitals; secondly, to review import requirements to facilitate more formula milk options on our shelves; and thirdly, put in place stronger consumer protection by tightening advertising and labelling restrictions and regulations. Let me elaborate each of these in turn.

First, on the role of hospitals. Hospitals play an important role where healthcare professionals provide information and advice to parents, and infants have many first experiences in our hospitals.

All hospitals, both public and private, encourage and support breastfeeding. They will provide infant formula when needed, for example, if the mother is unable to produce enough milk to meet the baby's needs or for specific medical reason for which the mother should be discouraged from breastfeeding. For example, when she is on certain medications or on chemotherapy. The Ministry of Health (MOH) will work with industry players to make available more infant formula options in the hospitals.

We will also strongly encourage all hospitals providing maternity services to achieve the Baby-Friendly Hospital Initiative (BFHI) certification. All public hospitals offering maternity services are already BFHI-certified today, but private hospitals have yet to come on board. This is unsatisfactory. BFHI-certified hospitals are committed to actively encourage and support breastfeeding targets and are not allowed to enter into sponsorship arrangements with milk powder companies, given the potential for conflicts of interest. We hope private hospitals will see that this is beneficial for their patients and will come on board to support this important initiative.

The Competition Commission of Singapore (CCS) recently completed a market study which examined the formula milk industry in Singapore and the nature of competition at each level of the supply chain. CCS will publish its report this week, and more details will be available then. Should there be any evidence of companies acting in concert to increase prices together, CCS will not hesitate to investigate the anti-competitive behaviour under the Competition Act.

Secondly, here are several measures that can be taken together to encourage greater price competition among brands. In Singapore, the six major manufacturers which supply formula milk have a market presence which is much bigger than the other manufacturers. This was a point also highlighted by Ms Sun Xueling in her online survey of about 2,500 respondents.

The Government will simplify and streamline import requirements, as well as remove unnecessary barriers to entry, in order to bring in more options for parents but, most importantly, without compromising food safety.

Thirdly, let me talk about consumer protection. Besides doing all these, at the same time, we should also improve consumer protection. The Government will strengthen restrictions on advertising and labelling. The Sale of Infant Food Ethics Committee, Singapore (SIFECS) Code of Ethics already restricts advertising, marketing and promotion of infant formula for infants below six months in Singapore. Nevertheless, HPB is supporting an ongoing review of the SIFECS Code which will include extending its coverage to all infant formula for infants up to 12 months of age. The Agri-Food and Veterinary Authority (AVA) will tighten its regulations on labelling and advertising further, including prohibiting the use of nutrition and health claims and idealised images for infant formula milk. This will also discourage companies from incurring massive costs on aggressive advertising and marketing activities and passing these costs on to consumers. Taken together, the increased choices available and improved clarity of labelling should enhance the competitiveness of the infant formula market.

Madam, the Government is committed to help ensure that the basic needs of all children in Singapore are met. In this regard, ComCare provides assistance to low-income families in financial need, including families raising infants and young children. They can approach their nearest Social Service Office (SSO) to apply for ComCare Short-to-Medium Term Assistance. The SSO will assess their needs, and families may receive cash assistance for their basic needs. Let me assure Members that the cash assistance for families with infants and young children will take into account the costs of infant formula milk.

In addition to support for low-income families, all parents of Singaporean children can tap on the wide range of support measures under our Marriage and Parenthood Package, including the Baby Bonus Cash Gift, and Child Development Account to help defray child-raising costs.

To conclude, Madam, I would like to reiterate that the Government shares parents' concern about rising prices of formula milk in Singapore and is committed to addressing them. The Ministry of Trade and Industry (MTI) and other Government agencies, such as MOH, HPB and AVA, will take steps to increase consumer awareness, encourage good practices in hospitals, facilitate more formula milk options and further tighten regulations on labelling and advertising. The Consumers Association of Singapore (CASE) will also remind businesses to price their products fairly and look into consumer feedback on potential profiteering.

Mdm Speaker: Ms Tin Pei Ling.

Ms Tin Pei Ling (MacPherson): I thank the Senior Minister of State. I have a few supplementary questions to ask. First of all, would the Senior Minister of State be able to share why is it that milk powder is priced so highly in Singapore, compared with other comparable countries and over time? The jump is too significant, in my opinion, to be explained by operating cost increases. Also, milk powder is seen as essential for growing infants since they can only rely on milk. And a lot of young parents feel that they are held to ransom, especially for those with special medical needs. So, the price elasticity is quite low. Could that be one of the reasons driving the price increase and, if so, would the Government consider control measures, such as those implemented in countries like China, on top of introducing more competition, so that there is greater pressure to ensure that throughout the supply chain, the pricing is fairer and so that it is more affordable for young parents in Singapore?

Dr Koh Poh Koon: Madam, I thank the Member for her clarification questions. In terms of setting a price for special formulas, children who have specific needs for which normal milk formula cannot fulfil, for example, specific allergies or medical conditions, will, therefore, require more expensive formula feeds because of the special formulation required. It will be quite difficult for us to restrict a particular formula for its price, because there is definitely a research and development expenditure that the company has to incur. What we can do is to make sure that we increase the choices that are available and, where necessary, put in the necessary financial support to these families to defray the cost of such formula that they require. But hopefully, these are a more restricted group of infants.

For the larger group of infants that require formula feeding, for which breastfeeding is not an option, then I think this is where we need to educate our consumers as well, that despite whatever pricing strategy that they have on the generic formula, or despite whatever claims there may be, all formulas actually fulfil the minimum nutritional requirements and are, in fact, just as equally adequate.

There is also a big range of milk formula pricing on the shelves today. Some can go for about $20-plus to $30 for a 900-gramme tin, and others can go up to about $60. So, within this range, parents do have a choice. And I think this is where education of the parents to allay their anxiety that they are not shortchanging their children by giving them the cheaper option, because the cheaper option, nutritionally, is just as good as the more expensive ones. And this is where we can introduce the much more robust and healthier competition within the market by removing the information asymmetry.

Mdm Speaker: Ms Sun Xueling.

Ms Sun Xueling (Pasir Ris-Punggol): I thank the Senior Minister of State. The Senior Minister of State mentioned changing the import requirements to allow more choice, for other brands being brought into the market. May I know what is the timing that the Minister expects whereby this can be implemented because, in the short term, we still see evidence of certain pricing behaviours in the market. So, I would like to know how quickly these changes can be effected to help families in Singapore.

Dr Koh Poh Koon: Madam, AVA is reviewing the import requirements and some of the regulations. And we hope that by end of the year, we would be able to make some of these changes. If there are any changes to, for example, regulations, we will also need a little bit of time to engage vendors so that they have the "go-ahead" to go and bring in some of these new products. So, by end of this year, we hope to be able to finalise some of these changes.

Mdm Speaker: Dr Tan Wu Meng.

Dr Tan Wu Meng (Jurong): Madam, I thank the Senior Minister of State for his answer. It is an issue that many of my Clementi residents worry about as well. I have two supplementary questions.

Firstly, does the current consumer price index (CPI) include infant milk formula in the basket of goods to assess cost of living? As background, I note the recent CPI report mentioned milk, cheese and eggs under food, but not specifically infant formula.

Secondly, will MTI consider studying a cost-of-living index, specifically for parents with young children, so that the Government can understand better how to support young families, especially families starting with less?

Dr Koh Poh Koon: Madam, the answer to the first question is yes. Milk powder for infants' full cream milk powder and other milk powder, even skimmed milk powder are already included in the CPI basket for this category of food.

For the second question, the report on Household Expenditure Survey 2012-2013 published by the Department of Statistics contains data on average monthly household expenditure by household living arrangements, such as by the age group of the head of the household, the number of children in the family, and the age of the youngest child, as well as by household income group. So, there is some data that we already have. This data can be used to study and understand the expenditure of different types of households, including households with younger heads of family as well as young children.

The Government will closely monitor the cost of raising children in Singapore using some of these data and evaluate whether there is a need to compile specific price indices for households in this segment. But let us also understand that expenditure is very much influenced by consumer choices and consumer behaviour. Therefore, this is where I go back to the point about educating our parents to understand that expensive does not mean it is better; cheaper does not mean it is worse. There should be no guilt on the parents' part about buying the cheaper brand of milk. As long as your child can get used to the milk, or they are not suffering from any allergic reaction to that particular brand of milk, there is no real reason to really pay out more when there is something that is just as good and much cheaper. This is where education needs to play a role to help households rationalise their expenditure.

Mdm Speaker: Mr Henry Kwek.

Mr Kwek Hian Chuan Henry (Nee Soon): Madam, I would like to ask the Senior Minister of State to see whether special attention can be given to one particular group, which is the babies who need milk for special allergies. I was told that it could cost $45 to $105 for two to three days, depending on whether there is tube-feeding needed for kids requiring milk powder for special allergies. And if the extensive plan from the Senior Minister of State can also look into coordinating with the rest of Government to ensure that the right support is available for needy parents who need expensive formulations.

Dr Koh Poh Koon: Madam, for specific groups of children with specific needs, for example, special dietary concerns, this is where we can work closely with the hospitals to see if they can find a way of getting more options and provide some of these in a much more affordable way for the children.

Also, at the community level, there are ways we can help these families as well, outside the schemes from Government. For example, most of us would have ComCare funds we can use or even Community Development and Welfare Fund (CDWF) that we can also mobilise for short-term support, while the hospital tries to sort out how they can help these specific children with needs. Pre-term infants who require special formulas are a different category altogether but, fortunately, they are not the bulk of the kind of infants that we have to take care of. So, on a case-by-case basis, we can look at how to assist them.

Mdm Speaker: Ms Tin Pei Ling, last clarification.

Ms Tin Pei Ling: Thank you, Madam. I hear the Senior Minister of State that the regulations, if any, in terms of changes to the imports and the regulations will take some time and will be towards the end of the year. But I would like to ask if perhaps the Senior Minister of State can give an assurance that the Government will continue to work with the producers, distributors and even the retailers to ensure that the pricing will not continue to rise during this period of time.

Anecdotally, for example, which needs to be verified, residents have been telling me that over the last week, one of the brands, NAN, has increased its price by 7%. While it needs to be verified, I think it is a genuine concern and I hope that the Government can assure us that during this time where the necessary changes are being worked out, that it will continue to monitor very closely to ensure that young parents are not taken advantage of during this period.

Dr Koh Poh Koon: Madam, I assure the Member that the Government is keeping a close eye on this and we will continue to watch how this price trend goes. CCS is also keeping an eye and seeing how they can ensure that there is no price fixing, that there is also fair competition in the market.